What is the California FAIR Plan?
The California FAIR Plan is a state-mandated fire insurance program that serves as California's insurer of last resort. It is privately funded through premiums and assessments distributed across insurers by market share. For commercial properties and HOAs, it provides up to $20 million per structure, with a $100 million total cap. Course of Construction policies are available for up to two years.
Qualification requires a denial from the admitted market. Denials from E&S insurers alone do not qualify. Policyholders who adopt home hardening measures may be entitled to premium reductions.
❌ What does the California FAIR Plan not cover?
This is where HOA boards consistently face exposure. The California FAIR Plan does not cover: landscaping and outdoor grounds; shared community amenities such as pools, clubhouses, and recreational areas; evacuation expenses; private firefighter costs; assets under construction beyond the 2-year limit; losses that occur while a traditional claims adjustment is underway. Understanding these exclusions is critical when advising HOA clients on how to structure a complete wildfire program.
Coverage gaps
Structures only
The FAIR Plan does not cover landscaping, shared amenities, or evacuation costs.
Growing exposure
California FAIR Plan residential exposure has grown from $115B in 2020 to $603B in June 2025
Rising costs
The FAIR Plan has requested an average premium increase of 35.8%, pending DOI approval
Slow payouts
FAIR Plan claims require on-site adjustment and can take months to settle.
Alternatives to the California FAIR Plan for HOAs
The California FAIR Plan is not designed to be a complete wildfire solution. The most effective approach for HOAs is pairing it with parametric coverage that responds to precisely the gaps it leaves behind.
Wildfire event
A wildfire occurs. If the fire breaches the predefined perimeter around the insured HOA grounds, typically 100 meters, the policy trigger is met. The client and broker file a short notice of event and a one-page declaration of loss.
Satellite verification
An independent calculation agent retrieves high-resolution satellite imagery from the European Space Agency's Sentinel-2 satellite, scaled to 10x10 meter resolution, to verify the burned area within the coverage perimeter. No on-site loss adjuster is required.
Payout issued
If the trigger criteria are met, the insured is entitled to a payout of up to 100% of the policy limit. Funds are issued within weeks and can be used for any wildfire-related financial loss, not just physical damage.
Why parametric works for HOAs
Buys down deductibles and tops up limits
Clients can use the parametric payout to offset the California FAIR Plan deductible or bridge any sub-limit gap, immediately freeing up working capital for the board.
Fills excluded coverage areas
Landscaping, shared outdoor spaces, evacuation costs, and private firefighter fees can all be covered under a Descartes policy, addressing the most common exclusions in California FAIR Plan property insurance.
Covers under-construction communities
For communities under development, coverage scales with Total Insured Values as the project advances, ensuring protection at every phase of the build.
Reduces unplanned homeowner assessments
Rapid parametric liquidity means boards can fund post-fire recovery without levying emergency special assessments on homeowners.
Real-world example
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GPS coordinates, shapefile, or a map of the HOA grounds
The desired coverage amount for the contract
Wildfire loss history, if available
Our underwriting team responds quickly
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FAQ
Who qualifies for the California FAIR Plan?
Homeowners and property owners, including HOAs and COAs, who have been declined by an admitted carrier. Denials from E&S insurers do not count toward qualification.
What are the alternatives to the California FAIR Plan for HOAs?
For associations that rely on California FAIR Plan property insurance, the most practical approach is not to replace it but to supplement it. Parametric wildfire coverage can sit alongside the FAIR Plan to buy down the deductible, cover excluded assets, fund evacuation costs, and provide rapid liquidity while the FAIR Plan claim is being adjusted.
What constitutes a wildfire under this policy?
A wildfire is defined as an unmanaged and uncontrolled fire whose ignition point is outside the coverage area and has not been caused by intentional or willful misconduct, as defined in the policy terms.
How is the coverage area defined?
The coverage area is determined by taking the insured HOA location and adding a buffer of a predefined shape, typically 100 meters, around it. The exact geometry is determined by underwriting during the quoting process, in collaboration with the broker and client.
What kinds of financial losses are covered?
Any wildfire-related financial loss is eligible, including rebuilding shared outdoor infrastructure, evacuation costs, private firefighter fees, and FAIR Plan deductible buy-downs. The payout is not limited to physical damage.
How does the claims process work?
The client and broker file a short notice of event and a one-page declaration of loss. An independent certification agent then retrieves satellite data from the ESA's Sentinel-2 satellite, and the calculation agent produces the burned area map and determines the payout. Settlement is typically a matter of weeks, with no on-site adjusting required.
What is the resolution of the satellite data?
Descartes uses publicly available imagery from the European Space Agency's Sentinel-2 satellite. In the event of a claim, an independent third party scales the resolution to 10x10 meters, allowing detection of very localized fires.